Walt Disney (DIS) Has Fallen 4% in Last One Year, Underperforms Market

If you are looking for the best ideas for your portfolio you may want to consider some of RiverPark Advisors top stock picks. RiverPark Advisors, an investment management firm, is bullish on Walt Disney Co (NYSE:DIS) stock. In its Q2 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Walt Disney Co (NYSE:DIS) stock. Walt Disney Co (NYSE:DIS) is a diversified multinational mass media and entertainment conglomerate.

In July 2019, RiverPark Advisors had released its Q2 2019 investor letter. The investment firm said that Walt Disney Co (NYSE:DIS) stock was one of the top contributors to the Large Growth fund’s performance in Q2 2019. Walt Disney Co (NYSE:DIS) stock has posted a return of -4.2% in the trailing one year period, underperforming the S&P 500 Index which returned 10.7% in the same period. This suggests that the investment firm was wrong in its decision. On a year-to-date basis, Walt Disney Co (NYSE:DIS) stock has fallen by 12.6%.

In Q2 2019 investor letter, RiverPark Advisors said the Large Growth fund posted a return of 7.4% in the second quarter of 2019, outperforming fund’s benchmark the S&P 500 Index which returned 4.3% in the same period. Let’s take a look at comments made by RiverPark Advisors about Walt Disney Co (NYSE:DIS) stock in the Q2 2019 investor letter.

“Disney: DIS shares returned an impressive 26% for the quarter as the company unveiled its plans to launch Disney+, its Netflix-style streaming service, and to grow Hulu and ESPN+. DIS is blessed with distinctive content that includes both live sports (providing large, non-time shifted audiences) and incomparable brands including Disney, Marvel, Pixar and Lucasfilm (the Star Wars franchises), as well as the ABC network (providing deep inventories of stories and characters). We believe that, as the owner of such an expansive library of proprietary content, Disney is among the best positioned media companies in the new landscape combining multichannel and direct-to-consumer distribution. Based on an expected price of $7 a month for Disney+ and the company’s projection for a subscriber base of 60-90 million people by 2024 (about half of each of Netflix’s 150 million subscribers and the 150 million people that visit Disney parks annually), Disney should add $5–$7.5 billion in incremental annual revenue (an 8%-13% boost to 2018 revenue). On top of that, management expects ESPN+ and Hulu to add an additional 50-70 million subscribers.

In addition to its deep library of media assets, Disney has a consistent and highly profitable parks business, its best-in-class studio segment, and its consumer products division, each of which are thriving. We also note that DIS has an extremely strong balance sheet (just over 1x debt to EBITDA ratio) and a growing pool of excess free cash flow ($10 billion for 2018) to be used both to return to shareholders and to invest in future opportunities. Disney is a well-positioned company that, prior to its investor day, traded at a significant discount to the broader market. We maintained our position during the quarter and DIS is a core holding in the Fund.”

In Q2 2020, the number of bullish hedge fund positions on Walt Disney Co (NYSE:DIS) stock increased by about 3% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Disney’s growth potential. Our calculations showed that Walt Disney Co (NYSE:DIS) is ranked #18 among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.